State budget shortfall could reach $1.2 billion

The 2026 legislative session kicked off Wednesday, Jan. 14, and lawmakers face some sobering news about the budget. Colorado currently faces a budget shortfall somewhere between $850 million and $1.2 billion, depending on estimates and forecasts. 

Even though the state made deep cuts in the 2025 legislative session and in the special legislative session in August 2025, it continues to face a funding shortfall. This is due to several factors, including rising Medicaid costs and tax impacts from the “One Big Beautiful Bill (OBBB)” passed by Congress in July 2025.

Before the holidays, state budget analysts also shared some challenging indicators with the Joint Budget Committee (JBC), which is charged with drafting the “Long Bill” (the state’s annual budget).

• Weakening job market and decreased consumer spending
• Credit card delinquencies at their highest level since 2011
• Lower-than-expected corporate tax income collections
• Lack of clarity in economic data due to federal government shutdown in November 

Governor Polis and lawmakers have said that protecting K-12 funding remains a priority. However, as funding pressures increase, that puts K-12 at greater risk.

Key Dates in the Budget Process for 2026-2027

• January 2026
  • Legislative session begins (Jan. 14)
  • Budget enrollment projections finalized (Jan. 31)
  • Monitor and refine preliminary budget assumptions based on State Legislature’s Joint Budget Committee (JBC), state economic forecasts, and revised Governor’s budget
  • Ongoing districtwide budget work based on student needs and budget assumptions
• March 2026
  • Legislature uses March state economic forecast to inform Long Bill and School Finance Act for 2026-2027
  • District refines budget assumptions based on introduction of Long Bill and School Finance Act
  • Board of Education receives budget update
• May 2026
  • Legislative session ends (May 13)
  • Board of Education receives proposed budget presentation which is also reflective of negotiations with staff associations (DTEA and CSEA)
• June 2026
  • Board of Education adopts budget for 2026-2027